- China has been the leading driver of oil demand for a number of decades, but that’s about to change.
- A recent Bernstein note predicted other countries in Asia will gain prominence, especially India.
- “India is expected to be the most important single region driving demand growth over the next 20 years.”
The upcoming decades will deliver big shifts in oil markets, as India’s demand growth is set to take on China’s, according to analysts at Bernstein.
While China has been the leading driver of oil demand for a number of decades, future growth will be led by other emerging markets, especially in Asia.
“India has been less important, but, going forward, India is expected to be the most important single region driving demand growth over the next 20 years, making it a key country to watch for future demand,” analysts wrote in a note from December 4.
That’s as oil demand will be based on each region’s economic expansion and the rate of decline in oil intensity — or how much oil is consumed per unit of GDP. As nations develop, they tend to see steeper declines in intensity; currently, India’s rate stands above that of China.
In its short-term outlook, Bernstein noted that global oil demand growth will slow to 0.9% next year from 2.4% in 2023.
Longer term, oil demand will reach 107.5 million barrels per day by 2030, up from 102 million barrels per day this year.
“Demand growth will be front-end loaded but the growth rate will be slower over much of the rest of the decade,” Bernstein said. “As countries such as India take the mantle of leadership in oil demand, we expect oil demand will however continue to rise.”
Bernstein is not alone in forecasting a slowdown. Recently, OPEC has put out the most optimistic predictionexpecting strong economic growth to buoy demand.
However, demand for oil has already slipped steadily this yearbattered by increasing borrowing costs and declines in emerging-market currencies.
This has complicated efforts by OPEC+ to lift oil prices through a series of production cuts. Despite earlier predictions of a $100-per-barrel level, Brent crude oil now stands at around $76.
